What is a Contract of Adhesion?
Whether we realize it or not, we have all agreed to a contract of adhesion dozens, if not hundreds of times. Indeed, each time we agree to the terms and conditions attached to the latest update to our iPhone’s operating system, we are agreeing to a contract of adhesion. Why does it matter, one might ask? Because if a contact is a contract of adhesion, it just might be unenforceable. California courts constantly struggle with contracts of adhesion. So what is a contract of adhesion, really?
Black’s Law Dictionary defines the adhesion contract, or contract of adhesion, as a “[s]tandardized contract form offered to consumers of goods and services on essentially ‘take it or leave it’ basis without affording consumer realistic opportunity to bargain and under such conditions that consumer cannot obtain desired product or services except by acquiescing in form contract. Distinctive feature of adhesion contract is that weaker party has no realistic choice as to its terms.” Blacks Law Dictionary (West 5th Ed. 1979), page 38. In Grand Prospect Partners, L.P. v. Ross Dress For Less, Inc. (2015) slip Cal.App.4th 2015/f067327, the California Courts of Appeal for the Fifth District described an adhesion contract as: “(1) a standardized contract (2) imposed and drafted by the party of superior bargaining strength (3) that provides the subscribing party only the opportunity to adhere to the contract or reject it.” Grand Prospect citing Armendariz v. Foundation Health Psychcare Services, Inc. (2000).
Contracts of adhesion are sometimes considered to be “unconscionable” and unenforceable by California courts. The courts have found various contracts to be adhesive and unconscionable in a variety of instances, such as:
- Medical arbitration contracts
- Commercial arbitration contracts
- Insurance contracts
- Employment contracts
While not every contract of adhesion is unconscionable, if a contract, whatever its subject matter, is found to be both adhesive and unconscionable, a California court may determine that, or one of its provisions, is unenforceable.
To ensure your agreement will be enforceable in California, you will need the services of a rising star like Michael Leonard, Esq., named “Best of the Bar” by the San Diego Business Journal in 2016. You can arrange for a consultation with Mr. Leonard to discuss creating any type of business contract or any other business-related matter by visiting San Diego Corporate Law or by telephone at (858) 483-9200. He has the experience, knowledge and unique qualifications to ensure all of your agreements and contracts are enforceable in the California Courts.